In the previous year, we wrote an article about the government’s housebuilding target of 300,000 per year. A range of schemes and measures were put in place to help increase the housebuilding rate. Did they actually have any effect? This month, we are following up to see just how many new-builds UK were constructed in the last year. We also examine the margin between accomplished builds and the intended target.
That’s right. Just over half of the government target of 300,000 new houses were built last year. A grand total of 165,090 homes were built in England in 2018, missing the target by an overwhelming 134,910. During the global financial crisis, the housebuilding industry suffered immensely. To this day it has not fully recovered. The industry reached its peak at the beginning of 2007. When comparing the housebuilding rates in the final quarter of 2018 to the rates in the first three months of 2007, it was discovered that it has dropped by 17 per cent. This is slightly worrying as the government had a bigger picture of building 1 million houses by the year 2020.
Why Hasn’t The Target Been Met?
We know what you’re thinking: blame it on Brexit. This is not necessarily the case. A contributing factor is the sheer amount of time it is taking to obtain planning permission for land. This slows projects and developments down dramatically. Little can be done until the construction companies have planning permissions signed and sealed. The shortages for materials and labour has contributed to the shortfall. Perhaps, to a limited extent, you could say housebuilding rates have slowed due to the uncertainty of Brexit and stretched affordability. But that really would be grasping at straws. We cannot blame everything on Brexit.
What Does It Mean?
According to government estimates the UK needs to build between 240,000 and 340,000 new houses to keep up with the growing population. By missing the yearly target by nearly half, supply and demand stay seriously mismatched. In theory, this should drive prices up. However, as we are seeing currently, they remain lower. All in all, dropping property prices are expected to be temporary. At the start of 2018 housebuilding rates got off to a relatively good start. In the final quarter of the year, the industry slowed tremendously. The starting phase of new-builds UK fell by 8 per cent between October and December of last year compared to the three months prior.
The End Goal for New-Builds UK
Back in 2015 it was agreed and announced by the government that there would be an additional one million homes by the end of the year 2020. Then, in 2017 the election manifesto that was brought forward again confirmed the construction of an additional one million houses. It did not stop there though. It was then pledged that an extra 500,000 homes would be built by the end of 2022. That brings the target up to 1.5 million.
Last year as a nation the housebuilding levels reached a 31-year high. All the same, they didn’t meet the government’s target.
Supposedly, the government has plans to pump up to £44 billion into the housebuilding industry as part of an upcoming housing program. We currently sit at a grand total of 504,650 completed new-builds UK houses, and we have just two years left to get to the one million mark. It isn’t impossible, but it sure will be tight.